Sri Lanka's Continental Hotel Spends $60mn On Expansion

11th July 2010, www.lankabusinessonline.com

Continental Hotel, the oldest 5-star rated property in Sri Lanka's capital Colombo will spend 60 million US dollars to expand and refurbish to cater to an expected influx of tourists after the end of a long running war, an official said.

Sri Lanka's listed Hayleys group bought a 51 percent stake in Continental hotel in March 2010 for 1.8 billion US dollars (15.5 million US dollars) or 21 rupees per share valuing the entire hotel at over 30 million US dollars at that time.

But the stock traded last week a 28 rupees a share.

A key shareholder of Hayleys is Dhammika Perera, whose Vallibel group now controls Amaya Leisure, which has started a 100 million US dollar expansion program.

"Continental is also on the verge of spending 10 million US dollars in refurbishing the property," Amaya Leisure managing director Lalin Samarawickrama told a business forum in Colombo organized by Acuity, an investment bank.

"They have another 50 million dollar development in the back of the hotel to develop further bedrooms."

Five star rated hotels in Sri Lanka's capital are now enjoying close to 80 percent occupancy and are yielding about 90 US dollar a room, officials of John Keells Holdings, which own two newer hotels in Colombo said.

Samarawickrama, who is a director of Continental did not elaborate on financing, but hotel is debt free and has space to leverage.

The hotel is on a 99-year land leased from Sri Lanka's tourist board, a state agency, with 57 years remaining unexpired.

"The hotel is the only five-star in the city with a direct seafront," Nimal Perera, a top finance official in the Vallibel group was quoted as saying soon after buying into the firm.

"And it is completely debt free."